Pakistan’s Mobile Phone Industry is At The Brink of Collapse

Virtually all of Pakistan’s 30 mobile phone manufacturing plants, including three foreign-owned plants, have stopped production. This is due to raw material shortages imposed by import restrictions, threatening the jobs of around 20,000 employees.

Most businesses have dismissed their employees after paying half of their April salary in advance and promising that they would be summoned once production begins. Nonetheless, a mobile phone maker expressed concern that the enterprises were forced to lay off workers during Ramadan owing to the ‘incompetent and strange practices’ of the finance ministry.

The restrictions have made it difficult for importers to get a letter of credit (LC), a bank document that assures a buyer’s payment to a seller is completed on time and in the proper amount, restricting the import of critical equipment and components needed for mobile phone manufacture.

The Pakistan Mobile Phone Manufacturers Association (PMPMA) notified the IT ministry that local mobile supply had practically ended and marketplaces were experiencing a shortage of mobile phones.

Haji Abdul Rehman, chairman of the PMPMA, stated that the situation was equally troubling for customers, who had to pay much higher costs for locally produced mobile phones. To function at full capacity, the sector requires imported components and parts worth $170 million per month, but the government’s LC restrictions have suspended imports.

Manufacturers have nearly depleted their raw materials supply, which came mostly from China, South Korea, and Vietnam, and banks had been advised not to accept imports. As a result, Pakistani manufacturers have sent their staff home, and 90 percent of Chinese exports have returned to China, severely damaging Pakistan’s reputation as a mobile manufacturer.

The PMPMA has requested the government to allow appropriate numbers of parts to be imported for the industry to operate at half capacity.

Muzzaffar Hayat Piracha, CEO of Air Link Communication Ltd, is worried about the prospects of the sector as a whole, as it is impossible to revive an industry after it has been widely shut down. The mobile phone sector directly employs 20,000 young Pakistanis and indirectly employs an additional 20,000.

Via Dawn